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To our Socialist
money changers:
Well, if you told me you were drowning,
I would not lend a hand,
I've seen your face before, my friend,
but I don't know if you know who I am.
Well I was there and I saw what you did,
I saw it with my own two eyes.
So you can wipe off that grin, I know where you've been,
it's all been a pack of lies.
And I can feel it comin' in the air tonight, oh Lord,
I've been waiting for this moment all my life, oh Lord.
And I can feel it comin' in the air tonight, oh Lord,
and I've been waiting for this moment all my life, oh Lord,
Oh Lord...
Yeah, I saw what you did, Ben.
And you too, Tim.
Glenn Beck talks about the Sprott
report on TV today!
Friend of Another
FOA (08/09/01): "Clearly, the coming drastic constriction in dollar
financial trade will trigger a super "print press" response from
the Fed. They will not be pushing on a string; rather picking up the ball of
twine and throwing it! All the while using the old 1980s "monetary
control act" that opens their use of monetizing almost anything and
everything. They won't be adding reserves to the banking system in the
future; rather buying any and all debts from anyone that needs fresh cash. Believe
it!"
Costata: FOFOA, isn't this exactly what is happening now? I ask myself,
should a simpleton like me bet against someone capable of extrapolating so
insightfully?
FOFOA: Yes Costata, it is jaw-dropping to read some of the things he wrote a
decade ago. From what mountain top was he observing the world to gain such a
perspective?...
FOA (10/5/01; 10:55:19 MT - usagold.com msg#112)
Discussing the World with Michael Kosares
Hello MK
I wanted to come back to your last stop here on the GoldTrail to address your
points and expose myself to the world. (smile)
I bet you and many hikers think I am tagging all Americans and gold thinkers
with this "Hard Money Socialist" label. Ha,,,,, let me slowly turn
around so everyone can take a good look what a HMS looks like. Yes, that's
right,,,,, I fit the definition completely.
[Me: Hard Money Socialist was a term FOA used for those he viewed as
typical Western "gold bugs". It referred to people who both
promoted the return of gold into the transactional currency realm and also
supported the status quo by investing in "leveraged" paper gold and
mining stock.]
Most of my life I thought gold should be locked into any official currency
system to act as a gauge and controlling factor against socialist tendencies
in governments. I studied and in some cases talked to all the prominent
thinkers on the subject.
In the late 60s, when Harry Browne was living in LA, his pre-book views took
on quite a following. Me included! Oh, it all seemed so natural then; the
eventual breakdown of our misguided economic policies had to, one day, kill
the whole dollar printing game! We all thought that "the coming big
failure" would drive every government back to using gold as money; or at
least in some version of another gold exchange standard.
However, even then, I had some serious people pointing me in a different
direction. You mentioned how people saw Harry's thoughts ----"considered
him the lunatic fringe back then simply because most people never heard of
such a thing"---! Ho ho, you should have seen my reaction to these other
radical, foreign views I was hearing!
Truly, Harry's stuff seemed so much more real, so much more "The
American Way", that it just had to work. Well, it did and we have
whole libraries full of historical scrip and economic writer's papers to
chronicle his correctness. But you know, I also looked back at these other
guys explanation of things and they were every bit correct too,,,,, the
effects were the same. Then as the 70s ended and the 80s ran on, their much
more longer-term understanding really took hold and left all other gold / currency
explanations in the dirt. True, all the rest of the hard money crowd gained a
little with each gold cycle high, but were also shot down with each cycle
drop. The trouble is that historic process is a time consuming affair (smile)
and most of the younger boys and girls that come here don't have a full
hands-on perspective of how we got here. Current dogma has a way of leaving
out important turning points that are really needed to be factored in. Hell,
a few decades of cycles became so regular in our mind-set that a whole
industry was born, explaining why cycle investing works (smile). In time I
came to understand that there really was a long term, singular move, evolving
along as a political play at work here. The last decade only served to
underscore it all.
The early 90s Gulf war spike in gold should have been the final revenge for
us bugs. Can you imagine?,,,,,, war in the middle eastern oil fields,,,,,,,
hundreds of oil wells burning and gold gets shot down?? I was already 80% in
my associates camp of thinking by then and that spike down pulled my other
20% right in. I knew then that the whole story was changing on political
grounds and was not going to follow the Mises path.
My typical hard money long-held belief, back then, was always:
----"Gold is the only official money of the world and will return to
these roots one day"-------- and -----" some world wide financial
dislocation will drive all governments back to this position"-----!!!!
It wasn't going to happen, no matter what, short of nuclear war. All we had
to do was look around and see how people the world over were attached to
using fiat currencies. The economic system itself was morphing into new
ground as world trade learned to function very efficiently with fiat digital
settlement. And that's something the 70s crowd said could never happen. That
was how many years ago?
A lot of the Mises crowd tried to point out that ---- "hey, this is all
very good but if you were on a gold system this economic game would be all
the more better" ----! Ha, no one cared,,,,,, why risk what was already
in process. Even the third world didn't want to hear it. They figured that
any return to a hard money system would harken back to a time they remembered
all too well. These guys suffered during the early century and no one was
going to tell them that the gold standard wasn't to blame. The US is today, and was then, robbing them blind but the situation seemed, to them, that this
new dollar standard was building them up. Looking at it all,,,,, we robbed
the Japan life style standards the most. All to buy us an almost free
standard of living, and they loved it!
When it came to using fiat money in our modern era, it made little difference
what various inflation rates were in countries around the world; 50%, 100% 1,000%,,,,,,
they went right on playing with the same pesos. There have been countless
third world examples of this dynamic, if only we look around. Mike, look at
what happened in Russia after they fell,,,, the Ruble stayed in use and
function with 6,000% inflation. My god they still use it now.
No,,,,,,, my guys are dead-on-the-money with respect to the political dynamic
that's playing out. The world is heading towards a huge financial/currency
crack up, but it won't work out with gold coming back into the money game. This
very long term transition is playing on a move away from dollar domination
with Europe preparing to suffer less than us by pulling in as many other
political trading blocks as they can.
When you look at who they are reaching out to; every one of these blocks
wants gold moving higher to shelter their dollar trading losses. None of them
expects to unload dollar reserves because our end time trade deficit won't
permit it. They can't just send the dollars to each other, buying their own
goods... that would never exhaust the external dollar float. Hell they now
have their own money to do trade with, the Euro.
The game is to let the US economy suffer from its own bloated expansion by
moving slowly away from supporting foreign dollar settlement with CB storage
(of dollars). This is more than enough to end the dollars timeline as we are
already stretched to the leverage limit. They know that Greenspan has but one
policy to use and that will be super printing. He is doing it now, right on
que!
The ensuing domestic price inflation will waste away all buying power of
dollars overseas. This is where they must install a free market in gold that
ends international confidence in the current gold fractional reserve game. This
is the "what for" of Britain moving itself and its gold operation
into the Euro arena. Once safely there, or there in initiative, the ECB and
BIS could cash out England's gold liabilities without crashing London's banks.
Mind you, this is all happening while Western style "Hard Money
Socialists" are defending their stance by saying the Euro is just
another fiat. Ha! These are the same guys that, throughout the 90s, put every
dime in expensive gold stocks and watched dollar currency inflation drive the
Dow up a trillion points while political actions killed their leveraged gold
plays. Now they will refuse to buy physical when political will is about to
impact this sector and they will most likely stand by while a Euro-based
dynamic starts another economic surge later.
Truly, reasoning and logic is all about your point below: "it is",
Mike.
MK, you mentioned:
------ Europe will be no more aggressive than it needs to be. As a casual
political observer, I believe that this policy is a mistake that forces
Europe to play the inflation game along with the United States, and that is
not the way I would have played the game given the opportunity. However, I'm
not the one calling the shots in Europe. I am an American businessman and
investor and in that capacity I am not so much interested in the world as
"I'd like it to be" but as "it is." I'm sure my European
counterparts feel the same way.
------
Right Mike, your last part is like Another said about the forest growing
anyway. The fact that it worked with fiat is the way it happened,,,,,
"it is"!
To address your point: well, they are awfully doggone aggressive now. Note
that they didn't make any attempt to match our post crash rates with a larger
drop of their own. That has placed them in a very pro-active dollar warring
position now. I'm sure Greenspan is steaming over this break away. It's built
a major carry proposition against the dollar and the Euro has to gain on
this. Here is an item from your News feed:
-------------------------------------------------
Currency Europe
10/05 13:06 Dollar May Fall vs Euro, Yen; U.S. Unemployment Seen Rising
By Chris Gothard
London, Oct. 5 (Bloomberg) -- The dollar, little changed, may decline against
the euro and the yen on expectations a report will show U.S. unemployment
climbed to the highest level in more than four years, more evidence the
nation is headed for a recession...
``We expect unemployment to rise,'' said Rod Davidson, who helps oversee
about $1 billion as head of fixed-income securities at Murray Johnstone Asset
Management in Glasgow. ``Everyone is watching for the slowdown in consumer
spending.'' He expects the dollar to decline to 96 cents per
euro by year-end, and recently sold U.S. Treasury bonds in favor of European
government debt...
Since Sept. 11, U.S. Treasuries maturing in one year and more returned 2.05
percent in local currency terms, according to Bloomberg indexes that take
into account reinvested interest. For a European investor, those returns are
reduced to 1.79 percent because of the dollar's drop against the euro in that
period.
-------------------------------------------------
Add a,,,,,,, solid rate difference on top of these figures,,,,,,,,, factor in
a "beggar thy neighbor" who is going to survive this economic war
between Japan and US ,,,,,,,,; and europe's thrust is major! I fully well
expect Europe to sell [gold] into any dollar gold market spikes,,,, now,,,,,
so as to hold the level steady,,,,,,, in an effort to inflate paper and
discredit our gold market. Eventually they will move to create a rift between
physical dollar gold prices and dollar derivatives prices. The call will go
out that American gold does not reflect what's happening to our Greenspan
dollar policy,,,,, real US inflation,,,,,,, and is a fraud.
You know, the US wants and needs a higher gold asset price now and I bet they
are confounded to find a way to achieve it. We are stuck in a situation where
we will ship a good portion at cheap prices first. We spent a decade or so
playing this gold game for better oil pricing and economic dominance; now a higher
dollar price of gold would hand our banks a trillion dollar derivatives loss
if gold rises. It just kills them because the Euro banking establishment
would simply cash out all their dollar based gold derivatives into euro
settlement and gain as gold spikes and builds an ever larger asset base for
all the ECBMBs.
[Me: ECBMB refers to the member banks of the ECB. He is saying that as the
paper gold market implodes, they would settle all paper gold with fiat
currency... THEIR euro fiat currency even though it was previously priced in
dollars. They could simply PRINT the currency to settle the contracts. This
would, of course, send gold to the moon and in the process send each ECBMB's
asset base to the moon. See: Your Own, Personal, Freegold]
I have to laugh at all these jokers that keep trying to understand the ECB
gold policy as some sort of currency backing similar to years past. It just
flies right past them that the ECB wants gold as a dollar replacing asset,
not local money backing. For your European clients, they would be in the best
of all worlds if they buy gold now. Their system is almost making rising gold
a law so as to buffer domestic dollar exchange rate loses.
MK, you also wrote:
-------- Of course, this is precisely what happened in the 1970s. Harry
Browne made the same argument back then -- that the $35 gold price was both
an institutional fixture and institutional fiction. Europe took advantage of
that situation by reclaiming a substantial gold reserve. When the London gold pool (both de jure and overt) broke down at the $35 price, the devaluation
(both de jure and and overt) quickly followed. Additional formal gold sales
proceeded from there from both the International Monetary Fund and the U.S.
Treasury.
Since today the gold price is both an institutional fixture and institutional
fiction much the same process is in motion at present -- only de facto and
covert. Are you suggesting a similar result? And with the euro present
and accounted for, will it lead to a new world order? -----------
The difference today is that the whole global financial, economic and
currency structure evolved to service a much more fast-paced dynamic. Simply
put, we cannot go back to not using digital settlement again. If we
are to use our trading efficiencies we must embrace fiat currency
use,,,,,,,,, and all its evils. This is what was recognized as we were placed
on the road to high priced gold. Kind of like high priced oil has been
factored into our equation,,,,,, so too will a rising gold price be seen as
the price we pay for modern operation. Of course, just as those that don't
have oil must pay to play, and gladly do so,,,,,, those that don't have real
gold when the tables turn will have to pay to keep up.
Back when Harry wrote his early views, gold was largely a physical market. Let's
see, were there futures in the late 60s? Nope, didn't think so (smile). Gold
was largely a government transfer thing with private players outside the US moving a relatively tiny amount of gold around. The real story in the 70s was in how
much gold the truly big operators couldn't get, even at those
oh-so-high prices. The little American bought his Krugerrands, gold stocks
and post-1975 futures and thought he was doing something big. In retrospect,
gold was dead in the water compared to where it should have gone. The dollar
faction never really stopped controlling it.
Today, it's not the government pricing policy that is in jeopardy, it's
the very market itself and this change will break not only the price fiction
but the institution also.
Ok, guess I went on enough here. I sure hope everyone can overlook my english
mistakes in those last two posts? More so in all my posts? (smile) Talk later
my friend
TrailGuide
Sir Topaz of ye olde time-currency.blogspot.com
I'm not too clear whether THIS is the "last" year of
the decade ('01 thru '10) ...or the "first" Year of the next one
('00 - '09)
What I AM unequivocally sure about is that 2010 will be the
LAST Year "we the people" tolerate this unholy contrivance that is
the monetary status-quo.
...either way ...Happy New Year!!
MY timeline on a strong Dollar would be (say) until the Ides of March.
One might declare then - 2010 - The WINTER of the Dollar. ...and in that
manner being Right ...whatever transpires eh?
At least until March anyways!
Actually, for mine, el-Bucko is coming into 2010 in excellent shape.
All her guns that matter are firing in the right direction and she should
keep this momentum going ...right until she runs off the Cliff ...(hopefully
on or before mid-March)
Re: Bonds last year - I think the "reversal" ...and consequent run
into the 140's, caught Mr Market off-guard to a large extent ...and they
tended to accept it as a "normal" reaction.
It "wasn't" then ...and "isn't" NOW FOFOA...
The evidence is in, the Gun has been found ...and the Corpse IS Dead ...so
why not call it as such ...eh?
I think if what we were discussing re: Negative Yield is to transpire, a BIG
failure (maybe plural?) in the Banking sector will emerge EARLY in the New
Year.
Not necessarily in the US either ...but sufficient to herd 'em into the short
end of the curve ...at, or above PAR"...and comfortable about being
there whatsmore!
The Long end is GONE for all money I think FOFOA!
This is NOT late '08 - early '09 I'm afraid.
FOFOA
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